France will not balance books for a decade

October 8, 2010

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By , PARIS, Oct 8 – France will need at least a decade to balance its budget despite adopting an austerity programme designed to reign it its soaring public deficit, Prime Minister Francois Fillon said on Monday.

"Our government has decided to engage in a massive effort to reduce its deficit, but I want to say before you all that this can not be the effort of one year or even three," he said, in a speech to a military college.

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"It\’s an job of ten years to bring our country back to a balanced budget, which we\’ve never seen since 1976," he said.

Last week, Fillon\’s government adopted a draft 2011 budget that foresees an unprecedented round of public spending cuts and de facto tax rises in the form of closing loopholes favouring various insurance and investment schemes.

It has ruled out, however, lifting a controversial measure protecting the super-rich from high taxation, and faces strong opposition from trade unions to its plan to raise the minimum retirement age from 60 to 62.

France\’s public deficit — which covers budgets by central government, welfare systems and local authorities, amounts to 7.7 percent of gross domestic product, a record high level.

The government has previously promised to reduce this figure to six percent next year and to the theoretical three percent maximum imposed on it by its EU treaty obligations by 2013.

Under the subsequent Stability and Growth Pact, EU countries are supposed to move their public finances into surplus in times of growth.